What Tether is developing in Africa: solar kiosks and new stablecoin business

Tether recently announced the promotion of solar kiosks in Africa, combined with stablecoin payments to provide energy and financial services to off-grid regions. This initiative will not only help increase local electricity penetration, but may also promote the development of stablecoins in Africa. This article is authored by Erik Hersman, founder of Gridless, an off-grid power system infrastructure company in Africa, and compiled, compiled and contributed by Deep Tide Techflow. (Synopsis: Europe's largest power company ENEL will "tokenize solar panels" to buy coins to offset electricity bills, RWA new application) (Background supplement: In-depth report: The potential and development of cryptocurrencies & stablecoins in Africa's digital economy) Two days ago, Tether CEO Paolo Ardorino announced their new plan on Twitter: promoting solar kiosks in Africa. Currently, hundreds of solar kiosks are in operation and offer monthly subscriptions to high-efficiency batteries that users can pay for using USDt and Bitcoin. Tether plans to expand the model to 100,000 solar kiosks to help bring electricity to the continent. My first reaction to this is that this is a very meaningful attempt. As I mentioned in a recent article on Africa's off-grid energy potential, innovative energy solutions are key to driving Africa's development. Electrification on the continent is not a zero-sum game, and there is no single solution that can completely solve the continent's electrification problem. Currently, up to 600 million people in Africa do not have access to electricity, accounting for 83% of the world's population without electricity. Therefore, exploring new off-grid energy models is an inevitable direction in the future. I strongly agree with Paolo that Tether is a once-in-a-century business. In 2024 alone, Tether made a whopping $13.7 billion in profits. Tether usage continues to grow in the US, EU, and China, while USDt demand in developing countries is rising rapidly. As local currencies depreciate in some regions, there is a growing tendency to use stablecoins (digital tokens pegged to fiat currencies such as the US dollar) to hedge against economic risks. In the case of Ethiopia (population of about 123 million), its currency, Birr, depreciated by about 30% in mid-2023. Today, Ethiopia is Africa's fastest-growing stablecoin market, with retail stablecoin trading volumes up 180% year-over-year. (Note: Since details have not yet been published, some of the analysis of the Tether model in this article is based on speculation.) Tether's plans in Africa combine off-grid solar kiosks with stablecoin-based financial services, which are a new highlight in this model. Before diving in, we need to understand the background of this field. Over the past 15 years, many solar kiosk projects provided by commercial companies and NGOs have sprung up on the African continent. The mode in which these projects operate and the reasons for their success or failure provide an important reference for evaluating Tether's plans. For example: Solar Kiosk (2011-2019): Operates in Ethiopia, Kenya, Botswana, Tanzania, Rwanda and Ghana with up to 250 solar kiosks. The ARED "Shiriki Hubs" ( ) underway: covering Uganda and Rwanda, there are currently 60 solar kiosks. Community Energy Kiosk (Community Energy Kiosks): Part of the SOGERV project in Malawi, it is small in scale with only 4-10 solar kiosks. Many solar kiosk projects in Africa face challenges in terms of profitability and organic growth, often operating on grants or funding from impact investors. Tether's business model is currently uncertain. It is believed that Tether is more likely to adopt a franchise model. But whichever model Tether chooses, there are a few things to pay special attention to: Funding sources determine success or failure Tether's plan is funded by a highly profitable, for-profit company, which lays a solid foundation for the project's success. By contrast, grant-dependent financing models, especially in "post-USAID" Africa, struggle to sustain companies' long-term expansion suites. Socially responsible investing can only help in the early stages, but large-scale deployment still requires a lot of capital investment from strong capital partners. Providing more community services is key If solar kiosks are only used as low-margin battery charging stations, local operators often struggle to make enough profits, and if solar kiosks want to operate sustainably, they often become social hubs for the community, providing the community with additional features such as WiFi, mobile payment services, mobile phone charging, and phone bill sales. If solar energy can also be used to provide a place for villages to watch football matches at night, it will often attract more popularity and further increase profitability. Tether's solar kiosk program is a good start: stable funding and guaranteed financing for growth. And, since franchisees are usually already mobile payment agents, they only need to additionally support USDt stablecoins as a payment option to smoothly implement the subscription service model. At the same time, the solar kiosk also comes with a WiFi deployment function, which provides more added value to the community and further enhances the attractiveness and practicality of the project. However, implementing an expansion kit in rural African markets is not an easy task. The "last mile" market faces significant logistical and operational challenges, as well as fierce competition in off-grid solar. The pay-per-use home solar financing model has been in development for 13 years, but many companies fail by underestimating the competitive environment and logistical complexity of the African market. In addition, the risk of theft and destruction, and the difficulty of building brand trust in a low-trust society, are key issues that cannot be ignored. The rise of African stablecoins In recent years, Africa has become a major growth region for the use of cryptocurrencies, with stablecoins being particularly popular. As of mid-2024, about 43% of the total value of crypto transactions in Sub-Saharan Africa comes from stablecoins. The rapid increase in this proportion reflects concerns about local currency instability. In fact, in Africa, stablecoins are even more popular than Bitcoin as the main tool for value transfer. This trend shows that stablecoins are becoming an important part of Africa's financial ecosystem. Stablecoins, such as USDt, have shown very practical use cases in African economies. A typical application scenario is cross-border trade and payments. Many small and medium-sized businesses choose stablecoins for cross-border payments due to difficulties in obtaining USD accounts. These businesses can convert their local currency into USDt, complete international transfers in minutes, and the receiver can quickly convert them into hard currency. This approach greatly optimizes the process of traditional cross-border payments. Compared to waiting weeks for high bank transfer fees, or relying on the high risk of black market foreign exchange, the use of USDt bypasses traditional intermediaries and high remittance fees, making it an indispensable tool for many import and export companies. Stablecoins are changing the trade landscape in Africa. In addition, the actual role of stablecoins is also reflected in daily transactions such as paying overseas tuition fees and buying inventory. The widespread use of stablecoins has solved many pain points in the traditional financial system, such as the high cost and latency of cross-border payments, so it has performed well in the African market and has become the backbone of the African cryptocurrency ecosystem.